It’s all fun and games: what’s next for the toys sector post-Covid-19



Two weeks ago, the US toy giant Mattel recorded its highest revenue for six years. The business, which is behind such family favourites as Barbie and Hot Wheels, saw a significant 47% increase in net sales year-on-year, propelled by pandemic-fuelled demand for toys and games. Mattel’s performance is indicative of the wider growth in the global toys arena. Over the past year and a half, families stuck indoors due to Covid-19 have turned to toys to stay occupied and fend off boredom.

Now, as lockdown restrictions begin to ease around the world, businesses are faced with the challenge of how to capitalise on this growth and sustain it into the next chapters. In this column, I’m taking a look what has happened in the toys space over the past year – and what businesses can do to succeed in the weeks and months ahead.

One of the market’s most predominant trends is the move towards educational toys. Over the last year or so there has been a surge in toys designed to test and develop brain power, as global school closures saw parents replace traditional lessons with education-focused products. Businesses like KiwiCo, which provides STEM-related toys as part of a subscription service, successfully filled the gap left by lessons – from March to mid-July of 2020, the company’s new subscriber acquisition increased by 250% compared to the same time frame in 2019. Online, the digital marketplace OnBuy reported a 32% increase in web traffic to its educational toys department after schools shut in the UK.

With schools having reopened in most key toy markets, it will be interesting to see whether this trend is sustained. Certainly, the shift towards more considered spending is likely to promote educational toys with long-term development value, rather than impulse purchases picked out by kids.

A product shot of Lego's Architecture set
In 2020, Lego attributed its rise in sales and profits to more adults playing with its ‘harder-to-build’ sets.

Moreover, the last year or so has proved that toys and games are not just for children. In September 2020, Lego attributed its rise in sales and profits to more adults playing with its ‘harder-to-build’ sets, and in the UK, complicated construction kits took a top spot in the bestseller list, driving a 7% increase in overall sales for 2020.

One clear winner in this arena is Games Workshop. The Nottingham-based company posted a 50% increase in profits for the six months to November 2020, thanks to the success of its tabletop fantasy modelling games Warhammer 40.000 and Warhammer Age of Sigmar. First and foremost a manufacturer (the company produces tens of millions of miniature figurines every year), Games Workshop thrived even despite store closures, as an 87% increase in online sales fuelled growth and allowed the business to repay its business rates support.

Indeed, in line with the rest of the consumer-facing sector, ecommerce has seen a boost across the toys market.  In the 12 months ending September 2020, online sales represented almost half of all toy sales in the UK, and ecommerce sales at the world’s largest toy maker Hasbro topped $1bn for the first time, accounting for a quarter of company revenue in 2020.

“As physical stores reopen, retailers will have to develop new concepts and trading offerings to encourage families back through their doors.”

The accelerated shift to ecommerce looks set to have a lasting impact on the market. In the medium-term, as physical stores reopen, retailers will have to develop new concepts and trading offerings to encourage families back through their doors. Hamleys, an iconic toy destination famous for its carnival-like atmosphere, is confident of a resurgence and is planning to open hundreds of new locations internationally.

Warhammer displays in a Games Workshop store
Games Workshop posted a 50% increase in profits for the six months to November 2020. Photo credit: Games Workshop.

The Entertainer, which is underpinned by its network of 170 stores, is another prime example of a toy retailer creating unique experiences for customers. The UK’s largest independent toy shop has reopened with dedicated ‘quiet hours’ for those with neurodiverse conditions and others who might find returning to stores overwhelming after months away. The business is also doubling down on retail partnerships. In October, Asda announced a tie-up with The Entertainer which saw toy aisles in five of the grocer’s largest supermarkets be transformed into branded concessions. M&S has also collaborated with The Entertainer-owned brand Early Learning Centre, to offer products for younger children on its website. At the very minimum, toy retailers must think carefully about how to offer families something they can’t find online, and make visiting their store a magical experience for children and adults alike.

“Without the need for flashy and eye-catching boxes, toy manufacturers can make significant progress on reducing their use of single-use plastic.”

We might also see toymakers reevaluate their use of packaging. While sustainability and environmentalism have been on the agenda for years, the acceleration of ecommerce may pave the way for a long-term reduction in packaging, much of which is designed to make products stand out on shelves. Without the need for flashy and eye-catching boxes, toy manufacturers can make significant progress on reducing their use of single-use plastic.

Hamleys flagship store on London's Regent Street
Hamleys is confident of a resurgence and is planning to open hundreds of new locations internationally.

The events of 2020 could also wave in a new era of socially-conscious play. As has been widely documented, the Black Lives Matter movement accelerated conversations around race and ethnicity, and we are seeing a renewed appreciation for diversity reflected in the market’s offering. Brands such as Akila, Bobby Rabbit, Acorn and Pip and OlliElla, for example, offer dolls that represent children from all ethnicities. On a larger scale, Mattel’s top-selling toys last year included Barbie in a wheelchair and a Maya Angelou Barbie, made in honour of Black History Month in the US.

Looking ahead, there are a number of trends on the horizon. Music-based games, driven by the increased awareness of music from platforms like TikTok, look set to be very influential, as well as wellness-focused toys which promote mindfulness. As lockdowns lift and cinemas reopen, licensed toys based on film franchises will likely take market share from educational products.

There’s no doubt that many of these trends – increased online sales, experiential retail and social purpose – have been bubbling under the surface for some time, and are here to stay. As we emerge from lockdown, only time will tell how the other trends will play out, and how consumer behaviour will adapt to the next chapters.

aelf.hewitson@thembsgroup.co.uk | @TheMBSGroup